Chapter CXXXI: Section III

FURTHER REACTION AGAINST THE MERCANTILE SYSTEM.

Simultaneously with this opposition, the theory of the international balance of trade underwent important refinements, a new and improved edition, so to speak, of old Colbertism.[A2-3-1] Each school is wont to estimate the favorableness of the balance according to the preponderance of that which they consider the most important element in a nation's economy. Thus the population-enthusiasts, after the middle of the 18th century, distinguished the "balance of advantage" from the "merely numerical:" the former is favorable to the country which, by means of its exports, employs and feeds the greatest number of men; the latter to the country with a preponderating importation of money. And they call the former much more important than the latter.[A2-3-2] The great advance which this view constitutes over the old system lies chiefly in two points: that the number and employment of men are evidently, so far as the whole national economy and national life are concerned, a much more important element than the quantity of money in a country; and further, that now, at least, the possibility of a simultaneous profit on both sides is admitted.[A2-3-3] The best writer in this direction, Jos. Tucker, is among the great-grand-parents of the Manchester theory of to-day!

A further advance was made by men who introduced the higher notions of nationality and of the stages of civilization into the theory of international trade. Thus, at about the same time, the socialistic J. G. Fichte, with his shut-in commercial state, and the romantic reactionary, Ad. Müller, with his organic whole of national economy.[A2-3-4] Finally, Fr. List,[A2-3-5] with his "National system of Political Economy," and his severe subordination of the mere "agricultural state" to the "agricultural, manufacturing and commercial state," acknowledges the favorableness of the balance in the nation which by means of the exportation of manufactured articles, the importation of the means of subsistence and of articles to be manufactured, demonstrates and promotes its higher stage of civilization.[A2-3-6]

[Footnote A2-3-1: Compare _Mengotti_: Il Colbertismo (prize
essay of the Georgofili at Florence), 1791. If, with _H.
Leo_, we were to designate the whole period from the issue
of the struggles of the Reformation to the preparations of
the French Revolution as the "age of the mercantile system,"
_Colbert_ would be a very appropriate type of it.]

[Footnote A2-3-2: Compare § 254. Here belong _Forbonnais,
Necker, Tucker_ (Important Questions, IV, 11; V, 5; VII, 4;
VIII, 5. Four Tracts, 1774, I, p. 36); _Justi_ in his middle
period (_Roscher_, Gesch. der N. O. in Deutschland, I, 451
ff.); but especially _Sonnenfels_ (politische Abhandlungen,
1777, Nr. 1), who sees the best sign of a favorable balance
in the increase of population. (Grundsätze, II, 333.) When
Austria, for 2,500,000, purchases diamonds _of_ Portugal,
and sells Portugal linen to the amount of 2,000,000, it has
the numerical balance against it, but obtains the "balance
of advantage." (II, 329 seq.) With an admixture of
physiocratism, this doctrine appears in _Cantillon_, Nature
du Commerce, 1755, p. 298 ff.; with an admixture of free
trade, in _Büsch_, Geldumlanf, V, 12.]

[Footnote A2-3-3: _Justi_, Chimäre des Gleichgewichts der
Handlung und Schiffahrt (1759), supposes a gain on both
sides in all commerce between nations. Hence, no nation can
attain to a flourishing trade in any way except it be to the
advantage of those with which it has to do. (p. 14 ff., 43.)
Here, it may be presumed, _Hume's_ Essay, On the Jealousy of
Trade, exercised an influence. _Sonnenfels_ distinguishes,
in foreign trade, five grades of advantage: 1, most
advantageous, when finished commodities are exported and
cash money is imported; 2, when finished commodities are
exchanged for raw materials; 3, finished commodities against
finished commodities; 4, raw material against raw material;
5, raw material against finished commodities. (Grundsätze,
II, 202.)]

[Footnote A2-3-4: It is as necessary that every nation
should constitute a separate commercial body as that it
should be a separate political and juridical body. The
person who asks: why should I not have commodities in all
the perfection in which they are made in foreign countries?
might as well ask: why am I not completely a foreigner?
(_Fichte_, Geschloss. Handelstaat, 1800: Werke, III, 476,
411.) _Ad. Müller_ compares universal freedom of trade to a
universal empire, which will ever remain a chimera.
(Elemente der Staatskunst, 1809, I, 283.)]

[Footnote A2-3-5: _List_ (Werke, II, 31 ff.) had, after
1818, recognized that a _passive_ balance for whole nations
was possible, if they were not able to cover their wants,
supplied from abroad and then consumed, by their income, but
were obliged to make inroads on their national capital.]

[Footnote A2-3-6: _Ch. Ganilh_, who expects a real
enrichment of a nation only from foreign trade (Dictionnaire
de l'E. P., 1826, p. 131), ascribes the most favorable
balance to the nation that exchanges dear labor against
cheap; that is, principally to a nation of tradesmen as
contradistinguished from a nation of agriculturists.
(Theorie de l'E. P., 1822, II, 239 ff.)]